Flora Growth, a cannabis company listed on Nasdaq, has announced the establishment of a $401 million treasury aimed at supporting its new blockchain initiative, Zero Gravity (0G), which focuses on developing decentralized artificial intelligence (AI) infrastructure. This bold move combines a private placement consisting of $35 million in cash and $366 million in digital assets, predominantly in the form of 0G tokens.
As part of this strategic pivot, Flora Growth will undergo a rebranding to ZeroStack while maintaining its existing Nasdaq ticker, FLGC. The announcement was made public on Friday, showcasing the company’s commitment to the blockchain and AI sector.
The financing deal has been spearheaded by DeFi Development Corp. (DFDV), a company managing treasury assets on the Solana blockchain, alongside other notable collaborators including Hexstone Capital and Carlsberg SE Asia PTE Ltd. Additional support has come from various firms like Dao5, Abstract Ventures, and Dispersion Capital, indicating a robust backing for the initiative.
“We’re thrilled to partner with FLGC on this fundraise and anticipate fostering a substantial collaboration between 0G and Solana,” expressed DFDV CEO Joseph Onorati. Furthermore, Flora Growth plans to diversify its treasury by holding a portion of its assets in SOL tokens, the native cryptocurrency for the Solana blockchain.
In reaction to the announcement, Flora Growth’s shares witnessed a surge of 5% on Friday, reflecting positive market sentiment following the news.
The primary objective of this treasury initiative is to enhance the infrastructure of the 0G AI platform, which currently boasts the capability to train an impressive AI model containing 107 billion parameters. This technical achievement reportedly outperforms existing distributed AI frameworks, including those developed by major technology firms like Google, by a staggering 357 times.
Incoming CEO Daniel Reis-Faria emphasized that the treasury strategy offers institutional investors an attractive opportunity to gain equity-based exposure to an AI infrastructure that emphasizes transparency, verification, and privacy.
Pending shareholder approval, the closing of the treasury initiative is expected by September 26. Certain investors will also have the opportunity to receive pre-funded warrants, which will be linked to the employment of 0G tokens during the funding process.
Meanwhile, industry observers note a concerning trend among digital asset treasury (DAT) firms as market net asset values (mNAVs) face significant declines. A report from Standard Chartered highlights that many DATs, previously buoyed by Bitcoin accumulation strategies, are struggling as their valuations plummet, exposing smaller entities to heightened risk.
A mNAV above 1 is typically necessary for firms to issue new shares and continue expanding their crypto holdings. However, with the majority of DATs now trading below this benchmark, their access to affordable capital has diminished, stalling further growth and accumulation efforts. Analysts foresee potential consolidation in the sector, suggesting that larger, capital-rich players are likely to emerge as dominant forces, while struggling smaller firms may become acquisition targets.
As the crypto landscape evolves, Flora Growth’s treasury launch represents a significant step in integrating AI with blockchain while reflecting broader trends and challenges within the industry.
